OVERVIEW

Background: Nancy Graham, former head of the Centre City Development Corp., resigned in July 2008 amid questions over her financial ties to two developers with projects before the agency.

What’s changing: Graham faces a potential $170,000 fine by the city’s Ethics Commission for allegedly influencing a Lennar Corp. hotel project despite collecting a total of $3.5 million from a prior deal with a Lennar subsidiary.

What’s next: The commission will decide March 4 how much, if anything, to fine Graham.

The former head of San Diego’s downtown redevelopment agency faces a potential ethics fine of up to $170,000 — which would be the largest ever in the city if approved — for allegedly failing to disclose her financial ties to a developer seeking to build a hotel next to Petco Park.

Nancy Graham, who resigned last year as president of the Centre City Development Corp. amid criticism that she had conflicts of interest with two developers, has been under investigation by the city’s Ethics Commission for 16 months. The panel released the probe’s findings late last night.

An administrative complaint approved by the Ethics Commission accuses Graham of participating in CCDC discussions and trying to influence the agency’s decisions on Lennar Corp.’s hotel project on 34 occasions in 2007 and 2008. Before and during that period, she received $3.5 million from a Florida development deal she was involved in with a Lennar subsidiary.

The timing of those payments means that each time Graham attended a public hearing, wrote an e-mail or signed a report that made a recommendation on or changed the hotel project, she was allegedly violating city law. The provision prohibits a city official from influencing a municipal decision when it is reasonably foreseeable that the decision would have a financial effect on one of her economic interests — in this case, Lennar.

Each violation could result in a fine of up to $5,000, for a maximum penalty of $170,000.

Graham’s attorney, former District Attorney Paul Pfingst, said the ethics panel is making a leap by connecting his client’s ties with Lennar’s Florida subsidiary to her oversight of a project involving the developer’s California subsidiary. He also said the panel is wrong to conclude that money received from an out-of-state company falls under the jurisdiction of city laws.

“She has 100 percent complied with the city ordinance,” Pfingst said. “She did absolutely nothing wrong.”

The Ethics Commission has set a March 4 administrative hearing to determine how big of a fine, if any, to levy against Graham. Last night’s decision means the panel has found probable cause that Graham violated city law.

If she is fined, Graham could appeal the decision in Superior Court. To get the panel’s action reversed, she would need to demonstrate that the commission had abused its discretion.

The panel’s staff and commissioners are prohibited from commenting on ongoing investigations.

The largest fine in the commission’s history was levied against former San Diego City Council candidate Luis Acle. He received a $68,243 penalty for various campaign violations, including failure to disclose debt and to pay it off in a timely fashion.

Like Acle, Graham has gone to great lengths to fight the allegations since the investigation began. The commission had to take her to court in October before she would turn over financial records that led to the investigation’s findings.

That legal dispute revolved around whether the panel’s request for checks also covered electronic wire transfers. A court ruled that it did, and Graham turned over the records.

At the time, the judge said Graham was making the panel “fight tooth and nail every step of the way” to get the financial information.

The ethics investigation focuses on Graham’s relationship with Lennar, which was one of several developers involved with the CCDC in a 1,929-room Marriott hotel proposal at Ballpark Village, just east of Petco Park.

At issue is a Florida development business that Graham owned with her former husband. Their company partnered in 2002 with Related Cos. and Lennar on a Florida project that netted the couple’s company more than $7 million before expenses and taxes. Graham never reported income from the venture — financial records show that she received $3,530,080 — on the economic-interest forms required of city officials.

Pfingst said she did not need to report the income because the development deal occurred years ago and the payments were delayed compensation stemming from the project’s success.

Graham, whose annual salary was $248,000, served as the CCDC’s president from December 2005 to July 2008. The quasi-independent, nonprofit agency shapes city redevelopment efforts downtown and has a $159.5 million budget.

Graham pleaded no contest in May to a misdemeanor charge of failing to disclose her financial interests. The case had to do with her connection to the Florida arm of Related, which won a $409 million urban-renewal project from the CCDC in 2007.